How to Open a IT Startup in India? Read to find out

India has seen an upsurge in the coming of IT startup companies. With the tech-movement throughout the globe, we see more and more IT companies in the market. Starting a IT company may be quite interesting and at the same time challenging, given the legal complexities and procedures. You may be in an anxiety-driven rush to build an amazing software product, to onboard customers, to design new ideas for creating that “cool” workstations, etc.  

As a startup company, the owners or the directors can take a loan from banks or have a venture capitalist invest in the firm. The industry is bound to keep growing as more and more businesses adopt information technology to digitize their operations, sales, and revenues.

Software Firm and IT related Statistic in India

As per records available the IT-BPM industry contributed about 5.8 % to the country’s GDP in 2008-09 and 7.7% in 2016-17. The Indian IT industry earned USD 152.6 billion in the last financial year of which 76% was from exports USA being the largest contributor to export revenues. The export revenues from software products and R&D services were worth USD 25 billion in FY 2017.

The industry is overall expected to grow at a rate of 7 to 9 percent in this financial year with a target of achieving USD 350 billion in revenue from the sector by 2025.

Though this sector has competition from global players as well as locally established companies, software companies are consistently in demand because of dependency on automated and technology-driven systems of all types of industries. Startups and smaller players are also in demand of low-cost factor.

Raising Funds For IT/Software Companies

Traditional Businesses depend on Bank Loans and other means like asking for investment from friends, family members but it is somewhat different from online businesses. In this industry, there are a lot of angel investors for the Software development of Software Companies. There are numerous financial ways the entrepreneurs adopt to collect funds from various means and it is not difficult as it seems.

Basic Process for Registering a IT Company

Moving towards registering of a IT/software company, the first thing you have to do is to get the name of your company approved with consent from ROC (Registrar Of Companies). Then you have to get CIN (Company Identification Number). After getting CIN, you have to submit all your legal documents as well as other legal forms. During this process, you have to mention all the necessary information about the company.

Also, mention the shareholders, share capital, funds and all the relative information which you need to fill in the legal form. Once it is approved, you (the owner) can apply for the certificate of registration.

The startup eligibility criteria for IT Companies

What makes your IT company a startup under the Startup India program? The following points will answer:

• The IT firm has to be a private limited company or a limited liability partnership
• The company remains a startup for the first ten years, post the date of registration.
• The company remains a startup if the turnover per year does not cross the Rs 100 crore mark in any of the 10 years. Once the company crosses the mark, it no longer remains eligible to be called a startup.
• The firm should have approval from the Department of Industrial Policy and Promotion (DIPP)
• The firm must come up with innovative ideas and schemes

If the following above comditions are satisfied, you need to register your firm or company as a startup in the Startup India scheme of the government. You just need to fill the form available for you on the Startup India website. You have to fill in all the details and upload a certain number of documents as well. 

Documents Requirement for Registration of IT Company as a startup

• Email ID and the contact number
• Company Details such as category, industry, sector, office address etc.
• Details of Directors/Partners ( Name, contact details, photos, gender)
• Authorised Representative detail such Name, contact details, and designation)
• A Brief info regarding business operations and product.
• Note on innovation.
• Description stating product uniqueness
• Revenue model.
• Overview of a business plan
• Website info

Other Important Registrations required by IT Companies in India

• GST registration at https://reg.gst.gov.in/registration/ for GSTIN number. The online form needs to be filled and relevant documents uploaded to get the registration done.
• MSME Udyog Aadhaar registration –though optional this is registration enables the startup business to enjoy certain Central and State government benefits that are reserved only for Micro, Small and Medium Enterprises. This registration can also be initiated online from https://udyamregistration.gov.in/UdyamRegistration.aspx The Ministry of MSME defines the different slabs for the service industry to register either as a micro, small or medium unit.
• STPI (Software Technology Parks of India) or STP (Software Technology Parks) license is required for setting up a 100% Export oriented unit (EOU). Documents required for this license are:- filled up prescribed form, MoU and AoA, Board Resolution for setting up STP unit, resume of CEO, detailed business plan, company profile, promoter background, areas of service, marketing plan, manpower plan, future plans, parent company details, list of capital goods to be procured, floor plan of the unit, rent agreement, invoice of internet service provider and applicable financial statements.
• Application for setting up a unit in SEZ (Special Economic Zone) – the owner needs to register himself first and then apply online and follow the process to get the Letter of Approval as per rules laid down by the Ministry of Commerce and Industry.
• Copyright Registration on the source codes of the software firm developed by the firm under Copyright Act, 1957 – this is a one-time exercise but needs professional help.
• Patent registration for the software – check under section 3(K) of the Indian Patents Act, 1970 for getting this registration.
• Software License for proprietary software, free software firm and open source software.
• File for trademark registration as it helps in brand building for the organization.

Takeaway

In India, there’s a crisp growth of IT Companies in this decade, it is almost like there is a software business revolution. The fact is India is the third-largest Software Startup Ecosystem around the world. Starting a IT company in this country can prove profitable as every business is associated with technology and its services. There are numerous Software giants in India like Infosys, Wipro, Tech M, TCS, and many more who are providing software solutions to the clients. The software companies are developing in all major cities in India. There are also multiple multinationals like Capgemini, L&T, Tata, Mphasis who have established themselves in the Indian market and are continuing to do so.

On the other hand, Startup India Scheme is an initiative by Government of India that offers financing and handholding support to IT Startup entities for growth and expansion. Additional key functions include promotion of Startups, wealth creation and employment generation.